Sirius XM (NASDAQ:SIRI) reported earnings before the market open on Tuesday. The company missed Wall Street profit estimates by a penny a share, and fell short of the expectation from WhisperNumber.com by a penny as well. A Sirius earnings miss is not a rare event as the company has only topped the whisper number in 11 of the 32 earnings reports for which we have data, a 46% positive surprise history.
The company reported that its total subscriber acquisition costs in the fourth quarter totaled 12% ($44 per additional subscriber) of adjusted revenue, the lowest percentage in the company's history. In pre-market trading this morning the stock actually gained an under whelming 0.3%. The next thirty days may take that limited gain back and then some.
The following table shows Sirius' reported earnings per share over the past six quarters alongside the whisper number expectation from contributing investors and traders.
Our primary focus is on post earnings price movement. In other words, we look at what happens when the company beats or misses the whisper number expectation. This price movement analysis has been confirmed through our 15 year track record, and by multiple independent academic studies that show whisper numbers provide greater returns when used as an investment vehicle, and have a greater impact on stock movement than analysts consensus estimates.
The company has now reported earnings short of the whisper number in seven of the past eight quarters. In the comparable quarter last year, the company reported earnings in-line with the whisper number. Following that report, the stock realized a 2.1% gain in one trading day. Last quarter, the company reported earnings two cents short of the whisper number. Following that report, the stock realized a 4.6% loss in five trading days.
The table below indicates the average post earnings (intra-day) price movement for Sirius within a one and thirty trading day timeframe:
The strongest price movement of -2.8% comes within ten trading days when the company reports earnings that miss the whisper number. The overall average price move through thirty trading days is 'negative' when the company reports earnings short of the whisper number. Based on the above data, and a miss of expectations, it's reasonable to believe that the stock will continue to see weakness (averaging close to 3%) over the next thirty trading days.
Since 1998, WhisperNumber.com has been tracking and publishing 'crowd sourced estimates' for earnings. We call these earnings expectations whisper numbers. Our whisper numbers are gained from individual investors and traders just like you that have registered with our site. While the whisper number itself is an important part of our analysis, a company's 'price reaction' to beating or missing the whisper number expectation is the key. On average, companies that exceed the whisper are 'rewarded', while companies that miss are 'punished' following an earnings report. Trading on whispers is a technical play on market psychology, rather than a bet on a company's fundamental strengths.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.